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Insurance Brokers
Ref:  Date: 09-07-2007
Cancellation of Broker License No. 165

4th July, 2007

IRDA /DB-117/03


Re: Order under Regulation 38 of IRDA (Insurance Brokers)
Regulations, 2002

 

Paramount Insurance Brokers Pvt. Ltd. (hereinafter referred to as the ‘Broker’) having its Registered Office at F-7/A, Hauz Khas Enclave, New Delhi-110 016 was granted license by the Authority to act as a Direct Insurance Broker, vide License No.165 on 30.05.2003, pursuant to the provisions of the IRDA (Insurance Brokers) Regulations, 2002.

WHEREAS, the Authority, on receipt of a complaint against the Broker, in exercise of the powers conferred under Regulation 33 of the said Regulations, appointed Mr.K.J.Prabhakar, as Investigator, vide its letter dated 13.06.2006.

WHEREAS, the Investigator conducted investigation and submitted his Investigation Report vide his letter dated 11.09.2006 and has given his findings and whereas the Report of the Investigator was sent to the Broker for his information and comments and whereas the Chairman cum Managing Director of the Broker in his response dated 17.12.2006 substantially denied the findings of the Investigator. It was, therefore, necessary to enquire into the charges leveled against the Broker.

WHEREAS, the Competent Authority in accordance with Regulation 36 read with Regulation 37 of IRDA (Insurance Brokers) Regulations, 2002, appointed Shri. P.Gurumurthy as the Enquiry Officer vide Notice No. IRDA /DB117/03 dated 21.03.2007 to inquire into and report to the Authority on the charges as summarized below.

  1. The Broker has violated the Regulation 9(3) of the IRDA (Insurance Brokers) Regulation 2002 as to the requirements for soliciting and procuring insurance business by employing persons not having requisite qualifications as prescribed under Regulation 9 and not providing the list of such employees as required under the Regulation 9.

  2. While conducting the insurance broking business, the Broker has not adhered to the conditions subject to which the license was granted, thus violating Regulation 11 of the IRDA (Insurance Brokers) Regulation 2002.

  3. The Broker has been indulging in inducements in cash or kind to the clients’ Directors and the persons acting as introducers, contravening the provisions of section 41 of the Insurance Act, 1938. The Broker has not complied with the code of conduct as specified under clauses 1, 3 (b) and 15 of Schedule - III of the Regulation 21 of the IRDA (Insurance Brokers) Regulations, 2002, thus , breaching the said provisions of Regulation.

  4. The Broker has breached the provisions of Regulations 24[4] of IRDA [Insurance Brokers] Regulation 2002 as to maintaining adequate limit of Indemnity in Professional indemnity policy obtained by it commensurate with its remuneration.

  5. The Broker has failed to comply with Regulations 26(1) of the IRDA (Insurance Brokers) Regulation 2002 as to the submission of half yearly accounts by not adhering to the stipulated time limit.

  6. The Broker has violated Regulations 25(1), 25(2), 25(4), 25(5) of the IRDA (Insurance Brokers) Regulation 2002 as to the maintenance, preservation and production of books of account, records, vouchers etc.

  7. The Broker has not complied with Regulations 27 of the IRDA (Insurance Brokers) Regulation 2002 as to the maintenance of systems of internal controls and internal audit .

 WHEREAS, the Enquiry Officer held an enquiry and submitted his report dated 02.05.2007, holding that above listed charges against the broking company have been established.

WHEREAS, the Authority has carefully gone through the complete records of the enquiry and the report dated 02.05.2007 of the Enquiry Officer, Shri. P.Gurumurthy and have come to the conclusion that charges against Paramount Insurance Brokers Pvt. Ltd., have been fully established.

WHEREAS, the Authority under Regulation 38 (1) of the IRDA (Insurance Brokers) Regulation 2002 issued a show cause notice dated 08.05.2007 to as to why an action under Regulation 34 of the IRDA (Insurance Brokers) Regulation 2002 should not be initiated against the broker.

WHEREAS, the Broker has replied vide his letter dated 31.05.2007. The reply does not set out any defense or explanation to the various acts of misconduct under Regulation 34 (2) of the IRDA (Insurance Brokers) Regulation 2002. It is, therefore, held that all the acts of omissions and commissions mentioned in preceding paragraphs stand established.

NOW THEREFORE, having regard to the nature and the gravity of the charges established and after considering the reply of the Broker to the show cause notice, the Authority in exercise of powers vested in it under Regulation 34 (1) of the IRDA (Insurance Brokers) Regulations 2002, hereby cancels the license No. 165 issued to Paramount Insurance Brokers Pvt Ltd with immediate effect.

Dated this 4 th of July 2007 at Hyderabad .



(K. K. SRINIVASAN)
MEMBER

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